When confronted with a potential litigation there are usually 2 responses:
1. Let’s file now or;
2. Let's file later.
This article will look at why that second option of waiting may not be the most prudent course of action due to the equitable defence of laches.
What is laches?
Laches is a defence available in equity which, in its most basic form, says the plaintiff should be stopped from bring their claim because they should have brought it earlier. Essentially the Court requires those who come to them after receiving notice of their claim to use due diligence and not make it inequitable to wait around in relation to their claim.
For example if you had a claim, but acted in a way that indicated to the defendant that you would not pursue your claim, and the defendant then continued about their life dealing with their affairs on that belief, then it would be unfair to request the Court to “tear up the transactions and go back to the position which might have originally obtained” (Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 per Rich J). The Court will not “disregard the election of the party not to institute his claim and treat as unimportant the length of time during which he has slept upon his rights and induced the common assumption that he does not possess any” (Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 per Rich J).
What about Limitation Periods?
Many claims have a time limit on them which is imposed by legislation. For example: a claim arising from a breach of contract has a limitation period of 6 years in NSW in which to bring the claim, from the time it arises (ss14 and 14A Limitation Act 1969 (NSW)).
Laches is not designed to undermine statutory imposed limited. Instead it is a defence available over and above the statutory limitations in a court of equity.
The defence of laches is not available merely because of a time period that elapsed. Rather it focuses on the conduct of the plaintiff. Whether the conduct of the plaintiff amounted to an acquiescence or caused the defendant to alter their position in reliance on the plaintiff’s acceptance of their actions (see Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291 at [635] per McLure P).
The statutory limitation periods by contrast arise purely due to the elapse of time.
As a result, a defendant may be able to argue laches on a much shorter time frame than the relevant statutory limitation.
What does this mean for the Plaintiff?
In general, a small delay to consider your position will not bar you from bringing a claim. However, care should be taken that the conduct of the plaintiff in the intervening period cannot in any way be construed as acceptance of the conduct that gives rise to the claim.
Furthermore, equity will take into account reasonable causes for delay such as third-party factors like illness and force majeure, as well as other factors such as undue influence by the defendant or reliance on defendant due their promises.
In some circumstances the claim first came to the knowledge of a predecessor of the plaintiff. For example, in Joyce v Cam and Others [2004] NSWSC 621, a case regarding trusts and the proper execution of deceased estates, it was held that it was necessary to consider not just the delay of the plaintiff but also the delay of the plaintiff’s mother whose entitlement was known but who did not dispute the administration of the will. The delay by the plaintiff’s mother and then the plaintiff had “deprived the defendants of the means of defending” the claim. However, currently there is no clear position on whether the delay of the predecessor should bar the current plaintiff.
In any event it is prudent to obtain legal advice as soon as knowledge of the cause of action arises so that every effort can be made to bring the claim in a timely manner.
What does this mean for the Defendant?
The defence of laches is not a perfect defence and as with many things in equity, the success of your case depends on the particular facts and circumstances of the parties.
However, where the defendant has relied upon the continuing conduct of the plaintiff, potentially to their detriment, the defence may be available and should be seriously considered.
This means that notes should be taken when the cause of action came to the plaintiff’s attention and the actions of them in the intervening period.
Furthermore there are technical legal arguments that should be considered when looking at whether laches is appropriate, for example the inactivity of the plaintiff which induces the defendant to adopt a certain belief and then act on that belief gives rise to a claim in estoppel rather than laches. In addition, there is often interchangeability between the defences of ‘acquiescence’ and ‘laches’, though there are nuances to each.
Conclusion
The title of this article is ‘Why Wait?’. There are many good reasons to wait, and there are many poor reasons to wait. Waiting for any reason however, may cause issues when the claim is finally brought to the Court’s attention. Notably, waiting may create an opportunity for the defendant to raise the defence of laches successfully, thus preventing the plaintiff from pursuing their claim.
Care must therefore be taken when delaying bringing a cause of action to the Court’s attention, and legal advice should be sought as soon as practical.
If you have further questions please contact us at frank@franklaw.com.au.
This is not legal advice.
